Elder Law Report

Estate of Confusion

February 10, 2023 Greg McIntyre, J.D., M.B.A.
Estate of Confusion
Elder Law Report
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Elder Law Report
Estate of Confusion
Feb 10, 2023
Greg McIntyre, J.D., M.B.A.

What is your estate? What is the best way to set up your estate? How could the way you set up your estate impact your ability to pass assets and be eligible for long-term care benefits? All this and more in this episode of the Elder Law Report.

#estateplanning #elderlaw #wills #trusts #elderlaw #estate #probate #longtermcare

Show Notes Transcript

What is your estate? What is the best way to set up your estate? How could the way you set up your estate impact your ability to pass assets and be eligible for long-term care benefits? All this and more in this episode of the Elder Law Report.

#estateplanning #elderlaw #wills #trusts #elderlaw #estate #probate #longtermcare

Speaker 0 (00:00:00) - Please don't wait till it's too late. McIntyre Elder Law.

Speaker 2 (00:00:17) - Hi, this is Greg McIntyre with another El Elder Law Report, and today we have a cool topic, the estate of confusion. Okay. The estate of confusion. And the reason I wanted to talk about this, I've just realized, and with clients even recently, that they don't know exactly what an estate is, or a lot of people are confused by what is an estate. And the reason I say that versus as an estate planning and elder law attorney, um, as far as how we view an estate Britain, what is an estate? What is your estate?

Speaker 3 (00:00:54) - My estate is this house on rolling hills in the English countryside.

Speaker 2 (00:01:03) - Oh, is is that what you think the estate is?

Speaker 3 (00:01:05) - Yeah. An estate is, is is what you own. It's what you got. You know, it's funny too, cause like I ask people what they own. That's one of the first questions, you know, Hey, what are your assets? Uh, and you can phrase that as what is your estate? But a lot of people don't. They do not know what that means. So I ask what their assets are, and sometimes they'll tell me, oh, you know, I have this home, but it's owned by the bank. You know? And that, that always makes me chuckle because bank don't own your home. They gotta lean against the home. They don't own the home, you know? Right. And so it's, it's everything you own. It's everything that you have a, a legal Right. And interest too. Uh, whether it's your, you know, real property, your tangible personal property, or you know, financial assets.

Speaker 2 (00:01:47) - Exactly. So, and when you die, your estate is, and I try to be really specific about this. Mm-hmm. <affirmative> is my estate, my probate estate at that point?

Speaker 3 (00:02:04) - No. Uh, your, your probate estate is your probate estate. So your estate is still everything you owned at your death. Everything you owned, that's payable, anything that's payable to you, anything you had an interest in, any contracts that are due to you, any, you know, payments that are due, rents, ease of trust, any thing you own real personal, financial, when you die. Now here's the thing. That's, that's the whole estate. Okay. The total assets of the estate. Then you have the, you know, from that big pot that we call the estate, there are some assets that may, right. This is a pot, by the way, this i, I don't know, sign language, but if I had to make a pot, that'd be it. So there are some assets that are gonna pass outside of probate, and there may be some assets that have to go through the probate estate.

Speaker 3 (00:02:57) - So it could splinter into the probate estate and non probate estate assets. Okay. But it all comes from the same estate. Okay. Same set of assets that you had, or you have the ownership in whenever you pass away. So, you know, it, it makes sense when you think about it in terms of specific assets. If I have life insurance, or maybe I have a bank account with a beneficiary on it, you know, that is part of my estate, still part of my estate when I die. But if it has a beneficiary on it, it's not gonna go through probate. So it's not part of the probate estate. So that's gonna split off and go to that beneficiary. Okay. If I have, let's say I have some real property in my name and I haven't done any type of deed to give riot survivorship, have a name beneficiary on it, haven't put it in a trust where it has a beneficiary that's gonna go through my probate estate and be controlled by my will. If I have a will, if I don't have a will by the state's will. Okay. So that's how it works. You have the main estate that could squint off into probate, non probate. Our goal typically is to make sure everything passes outside of probate. So you won't have any probate state whenever you pass away. Um, and that, you know, for, for many, many reasons.

Speaker 2 (00:04:12) - So my probate estate, that's what goes say through my will, which has to go through the probate process mm-hmm. <affirmative> the change title to assets that otherwise don't have a mechanism to change that title. Right. So, so my, my non-pro estate could be life insurance policies, IRAs that have specific beneficiaries, or what about a trust? Would that be my trust to stay outside of my prob beta stay

Speaker 3 (00:04:43) - Your trust to stay. Yeah. I mean, it's another word for anything you have in a trust before you pass away. If it ain't in the trust, then it's not part of your trust to estate

Speaker 2 (00:04:54) - Unless the trust is a beneficiary. Right. Of a life insurance policy, for

Speaker 3 (00:05:00) - Example. Yeah, and that's a good point because we set those up all the time. And I would say it's kinda like schroeder's trust, right? <laugh> at the time that you died, you know, while you're alive, it's not in the trust and at the time you die, it's instantly into the, into the trust at that point. So there's a point in time where it's not a trust asset and at the same time is a trust asset. But, um, point of the point of the matter is, is that it could still become a trust asset, even if it's a, an asset that you have that's part of your full estate. So basically it's an estate asset that does not go through probate, but goes to the trust and becomes part of the trust estate.

Speaker 2 (00:05:40) - You know, how do I know now that I have an understanding of what my estate is, it's everything I own during my life. That's my estate now. Mm-hmm. <affirmative> death. It could be partly probate, probate estate, partly a trust estate, partly a non probate, non-trust estate. Right? The things that are flowing outside of those tools. Right. How do I know how to set up my estate so that I can manage it properly during my life and at my death? And what's the best way to do it?

Speaker 3 (00:06:11) - Yeah. You know, the best way to do it is to, first of all, you gotta know what you have. And so it's a, you take the approach based on the assets that you have. There's a certain critical point where if you have a certain number of assets, it's gonna be useful to have a trust. And we've laid out where, you know, there's four conditions where it might be very useful to have a trust for people, past videos, past articles, things like that. But the idea is, is that anything that you have, generally speaking, you want to try to set it up to avoid probate. So that first requires you to look at what you have. A lot of people have a house, a lot of people have bank accounts, a lot of people have retirement accounts. Those main assets can all be set up to avoid probate, whether you go directly to that account or to that asset like a house, and set that up individually to, to avoid probate and go to an individual, like a lady bird deed on a house, naming a beneficiary on an account, or if it's proper for you and you have the requisite type of assets, number of assets in need for it.

Speaker 3 (00:07:16) - You could put it law in a trust. And it's kind of a shotgun approach of, you know, having everything into one pot and anything in that pot can avoid probate if you pass away. So how, you know, whether or not something's gonna avoid probate is essentially whether or not it's already been prearranged to avoid probate, whether it's in a trust, whether it has a named beneficiary or a joint owner with right of survivorship. That's a good cover.

Speaker 2 (00:07:50) - So do I also wanna be aware of how I set up my estate and can the way I set up my estate affect whether I lose assets or keep assets and are eligible for long-term care benefits as I age to pay for assisted living, nursing home care, if I need it?

Speaker 3 (00:08:11) - Yeah, so the thing about your estate, whether it's before you die or after you die, it's, you know, there's risk to that. And to know what, how to protect it, you have to know what the risk is. It's really twofold. You know, the need for long-term care and probate, first of all, the need. And, and, and you, we, we look at this as an estate planning elder law attorney, kinda like an algebra equation, right? You gotta solve both sides of the equation. So you have this possible need for long-term care. I mean, my god, 70% of individuals will need long-term care at some point in their lives. It being tens of thousands of dollars a month. You gotta plan for that sort of thing. So you wanna make sure your estate is protected during your life by planning to make sure that those assets are situated where they're protected, and that you, they're not gonna disqualify you from receiving some type of benefit to pay for long-term care.

Speaker 3 (00:09:04) - Then the other side of the equation is that if you allow those assets, that you are able to keep that state to go through probate. That's the opportunity. And in North Carolina the only opportunity for creditors to come after those assets. So medical creditors, Medicaid, the nursing home, that sort of thing. So you really want to avoid probate for that reason. And probate, again, it's, it, it's something that's not pre arraigned. So someone has to figure out what the stuff is and who it goes to. That's someone is the court. The court asserts jurisdiction over those assets and decides how they pass. And one of the rules that the court has in the probate process is we're gonna pay creditors before we pay anybody else. So it's a surefire way to make sure that your creditors get paid and your and your kids, your loved ones get less than what they could get if you had planned to protect the, the estate, you know, during your life.

Speaker 2 (00:09:59) - Absolutely. Well, Brenton, thank you for being on this Elder Law report and exploring the topic, the estate of confusion. I hope this has helped clear up some of that confusion. Um, if you would like for us to help take your estate of confusion and turn that into an estate of clarity, then give us a call at McIntyre Elder Law. It's 1 8 8 8 9 9 9 6600, or check out all our content and you can book a free consult online@mcelderlaw.com. See you.

Speaker 3 (00:10:34) - See you.

Speaker 0 (00:10:37) - Please don't wait. Entire elder law

Speaker 0 (00:10:49) - Life is busy. We all know we put off planning until things get slow tomorrow. Never promise today, don't get too busy. Let, please don't wait til this lady come back in. Tiger Elder Ball. Additional planning or more complex, we can help when you are perplexed. If a loved one needs long-term care, we can help avoid some of the scare. Please don't wait to lady come back in. Elder planning benefits and even probate. We take the planning piece of your plate. If you were your spouse, were in the military, we can help with benefits for your family. Please don't wait. It's too late. Call Elder, please don't wait.

Show Notes

that assets are protected and passed on to beneficiaries as intended. The speakers emphasize the need to properly identify and categorize assets, as well as the...

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